Could gas prices get any higher? Yes, they can and it is expected that gas and diesel prices will continue to increase. Federal officials are looking for ways to reduce pain at the pump as gas and diesel prices continue to soar. As Americans get ready for a busy July 4th and summer vacation travel, all drivers need some relief at the pump. President Biden has asked Congress to place a 3-month pause on the federal gasoline and diesel taxes.The 18.4-cent federal gas tax, which helps fund infrastructure work, could be dropped if congress votes to approve it. This money is just a small amount of what consumers pay for a gallon of gas and that is often eclipsed by state gas taxes which are typically much higher. This 3-month pause would also reduce diesel by 24.4-cent per gallon. Even if both taxes are dropped, gasoline prices will not dip below $4 per gallon.
Congressmen on both sides are not likely to agree on this and reject the White House effort to suspend the federal gasoline tax. Why would they do this to us? But there is more to this than what’s on the surface.
U.S. gas prices are continuing to rise — giving drivers across the country another headache at the pump. Drivers once again are feeling a pinch when fueling their vehicles, with the average price for a gallon of regular gasoline in the U.S. jumping to $3.83-$4.60 a gallon, up nearly 30 cents from a month ago. Diesel is $4.36.
Even though prices are climbing everywhere, the steepest increases are in Midwestern states, which have seen their average gas price rise between 18 cents and 25 cents, according to AAA. The nation’s most expensive gas is in California and Washington state, where prices average $5.23 a gallon. The cheapest gas in the nation is in Mississippi, where the average price is $3.32 a gallon.
To be clear, gas prices today are nowhere near as high as they were in June 2022, when they reached a record high of $4.62 a gallon. Back then, gas prices across the nation were inching toward $5.00, cramping Americans’ travel plans. Rising gas prices are playing a major role in the surging inflation Americans experienced according to data from the Federal Reserve Bank of Kansas City.
Typically, when gas prices increase, the main culprit is the cost of oil. This month, however, oil prices are only part of the story. Here are three reasons gas prices are going up.
July was one of the hottest months on record for many parts of the nation, including Arizona, Texas and New Mexico. Phoenix, for example, had a record breaking 31 straight days of 110 degrees during the day.
Such high temperatures meant oil refineries had to reduce their output, as many of them can only operate at temperatures between 32 and 95 degrees. The reduced output sent gas prices higher. According to Andrew Gross, of AAA.
Rising oil prices
Crude oil prices have recently hovered around $80 per barrel, up from around $70 a barrel a month ago. When global oil prices climb, gas prices typically follow suit. Oil prices are climbing in part because Russia, the world’s third-biggest oil producer, decided last month to cut production starting in August. OPEC has also decided to reduce oil production. It’s important to note that analysts at investment bank UBS expect crude prices to increase $85 to $90 in coming months amid rising oil demand. This is going to be in higher prices at the pump for everybody.
Falling oil production
Saudi Arabia, the second-largest oil producer, also cut its oil exports last month. It slashed production by 1 million barrels per day hoping to keep oil prices elevated. The kingdom said it would extend its reduced production to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets, stated a Saudi Energy Ministry official.
The Saudis are particularly keen to boost oil prices in order to fund Vision 2030. What this really means is higher gas prices for us until we decide to drill more oil here and become energy independent.
Even if you don’t own a gasoline powered vehicle, you are going to pay the price as goods are constantly being transported by gas powered vehicles. Everything’s about to get more expensive.
Lauren Fix is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. A trusted automotive expert, Lauren provides an insider’s perspective on a wide range of automotive topics, energy and safety issues for both the auto industry and consumers. Her analysis is honest and straightforward.
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